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The Currency Futures Report

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Yen 'Soars' As Carry−Traders Cover, Hit 'Stops'

Thu, Jul 9 2009, 06:03 GMT
by Bob Kozak

Alaron

Japanese Yen (JYU9):

The Yen opened higher at our secondary Resistance level of 1.0618 as risk-averse carry traders covered short Yen positions as the Nikkei 225 slid 227 points. A weaker than expected report showing Machine Orders fell 3% as Q2 earnings reports begin, was enough for carry-traders to reduce exposure in global equity markets and send prices higher. A number of buy-stops were hit, at the previous Target Hi of 1.0664 level, driving prices to a daily Hi of 1.0904, before drifting lower into the close of 1.0828, up 267 tics. The s/t trend remains 'positive', w/firm momentum indicators. Traders should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 1.0972 and 1.1115, while an open below 1.0760 may find Support at 1.0617 and 1.0405.

Dollar Index (DXU9):

The DX opened higher at 80.92 and slid to a morning Lo at our Pivot level of 80.77. As equity markets retraced, safe-haven buying sent the Dollar higher into the afternoon session, posting an intra-day Hi of 8012, before drifting to a close of 81.005, up 14 tics. Pressure expected from the G-8 meeting did not materialize, as many member nations supported a higher Dollar to reduce pressure on their own currency and help exports. The s/t trend remains 'positive' w/ firm momentum indicators. Traders will key on direction of equity markets and Q2 earnings reports, as the Dollar will continue to attract safe-haven buying. A higher open should find Resistance at 81.16 and 81.31, while an open below 80.965 may find Support at 80.81 and 80.61.

Euro Currency (ECU9):

The Euro opened higher at 1.3902 and rose to a morning Hi of 1.3932 as equity prices rose, following a better than expected reports on German Industrial Production and French Business Sentiment. Prices retraced, following equity prices to a mid-day Lo of 1.3832, before bouncing into the close of 1.3850, down 77 tics. The s/t trend remains 'negative' w/ weak momentum indicators. A lower open may find Support at 1.3809 and 1.3767, while an open above 1.3873 should find Resistance at 1.3915 and 1.3979.

Published on  Thu, Jul 9 2009, 06:05 GMT